House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Minister for Competition, Charities and Treasury, the Hon Dr Andrew Leigh MP)

Chapter 2: Regulation of safety standards and information standards

Outline of chapter

2.1 Schedule 2 to the Bill amends the CCA (including the ACL) to improve the flexibility and enforceability of safety standards and information standards by:

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replacing the Commonwealth Minister's ability to 'declare' certain standards as safety standards and information standards with an expanded ability to 'make' safety standards and information standards;

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allowing safety standards and information standards to incorporate matters in instruments and other writings as they exist from time to time, including international standards;

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updating requirements relating to the nomination of alternative methods of compliance with safety standards, including through the addition of civil penalty provisions; and

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allowing the regulator to request certain information and documents in relation to compliance with safety standards and information standards and inserting a civil penalty provision for failure to comply.

2.2 All references in this Chapter are to the ACL unless otherwise stated.

2.3 References to the regulator means the ACCC for the purposes of the application of Schedule 2 to the Bill as a law of the Commonwealth. For the purposes of the application of Schedule 2 to the Bill as a law of a State or a Territory, regulator has the meaning given by the application law of the State or Territory.

Context of amendments

2.4 The Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 established the national regulatory regime for safety standards and information standards in the ACL, allowing the Commonwealth Minister to make or declare safety standards for consumer goods and product related services, and information standards for goods and services.

2.5 Safety standards specify safety features that a consumer good or product related service must meet before it is supplied to consumers. They are important in preventing or reducing the risk of injury to a person from consumer goods and product related services and ensuring that consumers are able to purchase consumer goods and product related services that meet their safety expectations. Safety standards complement the ability to identify and remove unsafe consumer goods and product related services from the market through recalls and bans and public warnings under the ACL.

2.6 Information standards require suppliers to provide certain information or present information in a certain manner, when supplying goods and services. Information standards may also give certain specific meanings to information. For example, the Country of Origin Food Labelling Information Standard 2016 gives specific meaning to the term "Grown in Australia." Information standards are typically used where the Government considers the characteristics of a good or service are such that the mandated provision of information will assist consumers to make informed purchasing decisions.

2.7 Standards (that is, standards that are not safety standards or information standards under the ACL) may be prepared in Australia by industry or non-governmental bodies, such as Standards Australia Limited. International associations or bodies, such as the International Organization for Standardization may also develop standards, and these standards may be approved by Australian standards setting bodies. However, prior to the amendments in Schedule 2 to the Bill, the Commonwealth Minister could not declare standards that were not prepared or approved by Standards Australia Limited to be safety standards or information standards unless the relevant association was prescribed in regulations. In addition, safety standards and information standards could not incorporate standards as they existed from time to time and could quickly become out-of-date.

2.8 Consultation on the proposed reforms occurred from 1 December 2021 to 21 January 2022. Treasury received 59 submissions from a broad range of stakeholders, including industry representatives, government, consumer groups, test laboratories, standards setting bodies, safety experts, and suppliers.

2.9 There was strong support across the board for improving the regulatory framework to allow easier recognition of international standards in safety standards and information standards. There was also strong support for improvements to the regulatory framework to more easily allow safety standards and information standards to reference voluntary standards as they exist from time to time.

2.10 Schedule 2 to the Bill makes it easier to recognise international standards in Australia, whilst also improving the flexibility and enforceability of safety standards and information standards.

Summary of new law

2.11 Schedule 2 to the Bill improves the flexibility and enforceability of Australian safety standards and information standards by:

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replacing the Commonwealth Minister's ability to declare certain standards as safety standards and information standards with an expanded ability to make safety standards and information standards;

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allowing safety standards and information standards to incorporate matters in instruments and other writings as they exist from time to time, including international standards;

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updating requirements relating to the nomination of alternative methods of compliance under safety standards, including through the addition of civil penalty provisions; and

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allowing the regulator to request certain information and documents in relation to compliance with safety standards and information standards, and inserting a civil penalty provision for failure to comply.

Comparison of key features of new law and current law

Table 2.1 Comparison of new law and current law

Detailed explanation of new law

Scope of safety standards and information standards

Ability to make safety standards and information standards

2.12 Prior to the amendments in Schedule 2 to the Bill, the Commonwealth Minister could make or declare safety standards that set out requirements for consumer goods and product related services, and information standards that set out requirements for goods and services.

2.13 The Commonwealth Minister was able to declare a standard (or part of a standard, with any additions or variations) that had been prepared or approved by Standards Australia Limited or an association prescribed by the regulations, to be a safety standard or information standard. This process was lengthy and delayed the timely incorporation of standards, including standards made by international standards bodies such as the International Organization for Standardization, European Committee for Standardization or ASTM International.

2.14 The amendments replace the Commonwealth Minister's ability to declare a standard to be a safety standard or information standard, with an updated, broader ability to make a safety standard or information standard, as set out below.

2.15 First, the amendments repeal the Commonwealth Minister's ability to declare a standard to be a safety standard under section 105 and to declare a standard to be an information standard under section 135. The ability to declare a standard is largely redundant due to the expanded ability for the Commonwealth Minister to:

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make safety standards under subsection 104(1) and information standards under subsection 134(1); and

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incorporate matters in an instrument or writing (including a standard prepared or approved by Standards Australia Limited or an international standards body) as they exist from time to time or at a particular time into a safety standard or information standard (see paragraphs 2.31 to 2.37).

2.16 Second, the amendments make it clear that the purpose of a safety standard is to prevent or reduce the risk of injury to a person. Prior to the amendments, subsection 104(1) (the enabling provision for safety standards) allowed the Commonwealth Minister to make a safety standard for consumer goods or product related services of a particular kind. Subsections 104(2) and (3) provided that a safety standard may consist of requirements about certain listed matters, as are reasonably necessary to prevent or reduce the risk of injury to any person in relation to consumer goods or product related services respectively. Such matters include the form and content of markings, warnings or instructions to accompany consumer good.

2.17 Amendments to subsection 104(1) clarify that a safety standard may be made for the purposes of preventing or reducing the risk of injury to any person (this is moved from subsections 104(2) and (3)). Amendments to subsections 104(2) and (3) clarify that the matters listed under those provisions do not limit the kinds of requirements that can be prescribed in a safety standard pursuant to subsection 104(1), but rather provide a non-exhaustive list.

2.18 Third, amendments to subsection 134(1) (the enabling provision for information standards) clarify that an information standard may be made in relation to the provision of information for a good of a particular kind or services of a particular kind.

2.19 Fourth, amendments to subsection 134(2) clarify that the kind of matters that may be prescribed in an information standard include record keeping requirements and the provision of information to any person (including the regulator).

2.20 Fifth, the amendments insert a civil penalty provision for breach of a requirement in an information standard in certain circumstances. A person will breach this civil penalty provision if:

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an information standard for goods or services of a particular kind is in force; and

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the person, in trade or commerce, has supplied, or offered for supply, goods or services of that kind; and

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the person is subject to a requirement under a provision of the standard (that is, a requirement prescribed pursuant to the enabling provision for information standards in subsection 134(1)) that states that section 137AA applies; and

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the person engages in conduct in relation to the supply or offer; and

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the conduct contravenes the requirement.

2.21 The maximum pecuniary penalty that a court may order for breach of this civil penalty provision is $50,000 for a body corporate and $10,000 for a person that is not a body corporate. The Court has discretion to consider the seriousness of the contravention and impose a penalty that is appropriate in the circumstances. The maximum penalties align with other minor civil penalties under the ACL.

2.22 The new penalties are in dollar amounts rather than penalty units, consistent with the current approach in the ACL. This is intended to achieve a uniform maximum across jurisdictions implementing the ACL as nationally uniform legislation, which may have differences in the value of a penalty unit.

2.23 A provision of an information standard must state that new section 137AA applies for the civil penalty under section 137AA to apply in relation to that provision. As the maximum penalty is low, the use of section 137AA is intended to be limited to minor contraventions, such as requirements relating to record keeping.

2.24 Prior to the amendments, sections 136 and 137 prescribed significant civil penalties for breach of an information standard. This will remain. However, pursuant to new subsections 136(1A) and 137(1A), if a provision of an information standard states that section 137AA applies, the civil penalties under subsections 136(1) and 137(1) respectively will not apply if the person only failed to comply with a provision that states that section 137AA applies. This, in effect, excludes the application of the civil penalties in subsection 136(1) and subsection 137(1) when section 137AA applies, to ensure that the lower civil penalty in section 137AA is appropriately attached to more minor contraventions, such as contraventions of record keeping requirements. However, the majority of requirements are intended to remain subject to the serious civil penalties for breach of an information standard under sections 136 and 137.

2.25 In addition, the evidential burden rests on the person who wishes to rely on subsections 136(1A) or 137(1A) in proceedings. That is, a defendant who wishes to rely on the exception to subsection 136(1) in subsection 136(1A) or the exception to subsection 137(1) in 137(1A) that the person only failed to comply with a provision of an information standard that states that s 137AA applies, bears an evidential burden in relation to that matter. This is appropriate on the basis that knowledge of the matter would be peculiar to that person.

2.26 Consistent with the principles in the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, imposing an evidential burden is appropriate in these circumstances as the person seeking to rely on the provisions is best placed to adduce or point to evidence in relation to their minor contraventions, such as requirements relating to record keeping and information gathering. In contrast, it would be significantly more difficult and costly for the prosecution to disprove as they may not have visibility of the relevant information.

2.27 New section 137B prescribes a civil penalty for failure to comply with a request for information or documents from the regulator (see paragraphs 2.47 to 2.55). In the case of any overlap between a provision prescribed for the purposes of new section 137AA and section 137B, existing subsection 224(4) continues to apply. That is, in circumstances where a single act or omission contravenes both a provision prescribed under section 137AA and a provision prescribed under section 137B, pecuniary penalty proceedings may be brought in relation to any one of those provisions, but a person is liable to pay only one pecuniary penalty. Both provisions have the same civil penalty.

2.28 New section 137AA only applies to goods that are intended to be used outside Australia. The amendments ensure that subsections 136(6) and (7) apply for the purposes of new section 137AA in the same way those subsections apply for the purposes of section 136. Subsection 136(6) provides that there is a presumption that a good is intended to be used outside of Australia if a statement has been applied to the good indicating either that the good is for export only, or that the good is intended to be used outside of Australia. Subsection 136(7) provides that the ways in which a statement can be applied to a good include the statement being woven, impressed, worked into, affixed or annexed to the good, or being applied to the covering, label, reel or thing which accompanies the good.

2.29 Sixth, the amendments ensure that safety standards may deal with matters incidental or related to preventing or reducing the risk of injury to any person, and information standards may deal with matters incidental or related to the provision of information for goods or services of a particular kind.

2.30 Seventh, the requirement to publish an information standard or safety standard on the internet is removed. This is redundant as safety standards and information standards are legislative instruments (see section 131E of the CCA) and subject to requirements under the Legislation Act 2003, such as the requirement to be published on the Federal Register of Legislation.

[Schedule 2, items 6, 7, 8, 9, 10, 12, 13, 14, 15, 16, 17, 18, 19, 23 and 25, sections 105, 135 and 137AA, subsections 104(1), 104(2), 104(3), 104(4), 134(1), 134(2), 134(3), 136(1A), 136(1B), 137(1A), 137(1B) and 224(3), subparagraph 224(1)(a)(ix)]

Incorporation of instruments

2.31 Prior to the amendments in Schedule 2 to the Bill, standards that were incorporated into safety standards and information standards were frozen at the point in time in which they were incorporated in accordance with section 14 of the Legislation Act 2003. This often resulted in long delays from when a standard was updated (that is, when a new version of a standard was made) to when a safety standard or information standard was amended to incorporate the updated standard.

2.32 This presented challenges that in some cases led to poorer safety outcomes for businesses and consumers. For example, if businesses moved to an updated standard they may have been in breach of a safety standard or information standard that referred to a superseded version of that standard, even when the updated standard has improved safety requirements that reflect changes in corporate practice, technology or science.

2.33 The amendments empower the Commonwealth Minister to make safety standards and information standards that make provision in relation to a matter by applying, adopting or incorporating, with or without modification, any matter contained in any other instrument or writing (an incorporated instrument) as in force or existing at a particular time or from time to time. This provides a contrary intention to subsection 14(2) of the Legislation Act 2003. Information standards and safety standards may also make provision in relation to any matter dealt with in an incorporated instrument if the instrument is prepared by an Australian or international standards body.

2.34 The amendments provide the framework for safety standards and information standards to incorporate matters in instruments and writings as they exist from time to time and make provision for matters dealt with in such instruments. Safety standards and information standards themselves need to be amended (or made) to implement this. An expedited and detailed review of safety standards and information standards will be undertaken by the ACCC to facilitate this. It is expected that safety standards and information standards which adopt time to time updates will set out guidance to assist entities to understand how the transition to complying with newer versions of an incorporated instrument will work in practice. Suitable transition periods are anticipated to be informed through consultation processes.

2.35 Safety standards and information standards will primarily incorporate Australian standards or international standards as in force or existing from time to time. The amendments are intended to ensure that Australian regulation keeps pace with standards development both in Australia and overseas. In relation to safety standards, this is also intended to ensure that businesses are able to use the latest and safest version of an Australian or international standard immediately. Beyond such standards, other matters may be incorporated as in force or existing from time to time to, for example, increase flexibility and improve safety or consumer outcomes.

2.36 Where practical, safety standards and information standards will only incorporate instruments and writing that are readily accessible for free to the public. However, in some cases, standards may need to incorporate extrinsic technical standards over which certain bodies have copyright. In those cases, the explanatory statement for the standard will set out where the incorporated material can be purchased for access.

2.37 Australian standards are generally accessible at no cost to Australian consumers for non-commercial, personal domestic or household use. The ACCC can make a copy of the incorporated material available for viewing at one of its offices, subject to licensing conditions.

[Schedule 2, items 3, 9 and 15, subsection 131E(4) of the CCA and subsections 104(5), 104(6), 134(4) and 134(5)]

Nominating alternative methods of compliance under safety standards

2.38 Prior to the amendments in Schedule 2 to the Bill, if a safety standard specified alternative methods of compliance and the regulator gave the relevant supplier a written request to nominate which set of requirements they intended to comply with, the supplier was required to give the regulator written notice (within the period specified in the regulator's request) specifying the requirements the supplier intended to comply with, pursuant to section 108 of the ACL.

2.39 The amendments repeal section 108 and replace it with a new section 108 which expands on the original requirement in a number of ways.

2.40 First, the amendments allow the regulator to give a request to nominate a set of requirements in relation to product related services, in addition to consumer goods. This corrects a technical error, given the explanatory memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010 indicated that section 108 was intended to apply to product related services, rather than just consumer goods.

2.41 Second, the amendments allow the regulator to give a request to nominate a set of requirements to a person that has supplied or offered for supply, is supplying or offering for supply, or intends to supply or offer for supply consumer goods or product related services, rather than just a supplier that intends to supply consumer goods. These categories include a person that is a manufacturer. For example, a person supplying or offering to supply will include a manufacturer supplying or offering to supply. Further, a person may be required to nominate the set of requirements that the person has complied with, is complying with or intends to comply with, rather than just the set requirements they intend to comply with. With these updates, a person may be required to nominate the relevant set of alternative requirements in relation to past, current or future compliance.

2.42 Third, a civil penalty provision applies for breach of the requirement to nominate an alternative set of requirements under new subsection 108(2). The maximum pecuniary penalty that a court may order for breach of this civil penalty provision is $50,000 for a body corporate and $10,000 for a person that is not a body corporate. The Court has discretion to consider the seriousness of the contravention and impose a penalty that is appropriate in the circumstances The maximum penalties align with other minor civil penalties under the ACL.

2.43 The civil penalty provision offers an alternative to the existing criminal offence for failure to nominate an alternative set of requirements under section 196 (which remains). However, the maximum pecuniary penalties for the civil penalty provision are set at a level that is higher than the maximum fine available for the criminal offence to ensure that the penalty will act as a deterrent, particularly for corporations, and recognises that being found liable to pay a civil penalty does not attract imprisonment or a criminal conviction.

2.44 Fourth, a civil penalty provision applies if a person nominates a set of requirements by written notice (as described above) or other means (this may include a requirement in a safety standard to nominate the chosen set of requirements on the consumer good itself, for example), and the person, in trade or commerce, has supplied, is supplying, offered for supply or offering for supply consumer goods or product related services and those goods or services did not or do not comply with that set of requirements. The maximum pecuniary penalty that a court may order for breach of this civil penalty provision is $250,000 for a body corporate and $50,000 for a person that is not a body corporate.

2.45 The new penalties are in dollar amounts rather than penalty units, consistent with the current approach in the ACL. This is intended to achieve a uniform maximum across jurisdictions implementing the ACL as nationally uniform legislation, which may have differences in the value of a penalty unit.

2.46 Consistent with the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, the objective of imposing this civil penalty is deterrence. Imposing a civil penalty for such circumstances also provides the ACCC with an enforcement tool to assist in encouraging compliance. The maximum penalties are amounts are significantly lower than the maximum civil penalty for breach of sections 106 and 107. This reflects the fact that the new penalty applies to non-compliance with a nominated set of requirements as opposed to non-compliance with the safety standard as a whole. The Court also has discretion to consider the seriousness of the contravention and impose a penalty, within the maximum penalty, that is appropriate in the circumstances.

[Schedule 2, items 11, 22, 24, subsections 108(1), 108(2), 108(3) and 224(3) and subparagraph 224(1)(a)(viii)]

Requirement to provide information or documents

2.47 The amendments in Schedule 2 to the Bill allow the regulator to request in writing, information or documents to determine whether a person has complied, is complying, or will comply with a safety standard that is in force for consumer goods or product related services of a particular kind or an information standard that is in force for goods or services of a particular kind.

2.48 This request can only be given to a person who has, in trade or commerce, supplied or offered for supply, is supplying or offering for supply, or intends to supply or offer for supply particular consumer goods or product related services in the case of safety standards, or goods or services in the case of information standards. A request can also only be given to a person in relation to their own compliance.

2.49 The person must, within the period specified in the request, give the regulator the requested information or documents.

2.50 A civil penalty provision applies if a person does not give the regulator the requested information and documents within the time period specified in the request. The maximum pecuniary penalty that a court may order for breach of this civil penalty provision is $50,000 for a body corporate and $10,000 for a person that is not a body corporate. The Court has discretion to consider the seriousness of the contravention and impose a penalty that is appropriate in the circumstances. The maximum penalties align with other minor civil penalties under the ACL.

2.51 The new penalties are in dollar amounts rather than penalty units, consistent with the current approach in the ACL. This is intended to achieve a uniform maximum across jurisdictions implementing the ACL as nationally uniform legislation, which may have differences in the value of a penalty unit.

[Schedule 2, items 11, 20, 22, 23, 24 and 25, sections 137B and 108A, subsection 224(3) and subparagraphs 224(1)(a)(viii) and (ix)]

2.52 These amendments are intended to work in a complementary manner to the existing ability for the Commonwealth Minister or an inspector to give a disclosure notice to a person to provide information or documents in relation to the supply or possible supply of consumer goods or product related services that may cause injury (see section 133D of the CCA).

2.53 The key differences are that a disclosure notice:

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may only be given by the Commonwealth Minister or an inspector (as opposed to the regulator);

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cannot be given in relation to information standards and is limited in scope in relation to safety standards, and

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non-compliance with a disclosure notice is a strict liability offence (as opposed to a civil penalty for breach of the new requirement to provide information or documents).

2.54 The new power to request information or documents is intended to enable the regulator to determine compliance with safety standards and information standards more broadly than a disclosure notice. It will be clear when a person is given a disclosure notice under section 133D as opposed to a request for information or documents.

2.55 New section 137AA allows the Commonwealth Minister to prescribe a civil penalty for breach of a requirement in an information standard in certain circumstances. In the case of any overlap between a provision prescribed for the purposes of new section 137AA and section 137B, existing subsection 224(4) continues to apply. That is, in circumstances where a single act or omission contravenes both a provision prescribed under section 137B and a provision prescribed under section 137AA, pecuniary penalty proceedings may be brought in relation to any one of those provisions, but a person is liable to pay only one pecuniary penalty. Both provisions have the same civil penalty.

Consequential amendments

2.56 A number of consequential amendments are made to:

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remove references to subsections 105(1) and 135(1), which provide the power for the Commonwealth Minister to 'declare' standards as safety standards and information standards respectively;

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ensure the existing offence provision relating to section 108 under subsection 196(1) is not expanded; and

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correct some existing technical errors.

[Schedule 2, items 1, 2, 4, 5, 21 and 26, subsection 224(3A), paragraphs 131E(1)(b) and (i) of the CCA and subsections 2(1) (definition of information standard and safety standard) and 196(1)]

Commencement, application, and transitional provisions

2.57 Part 1 of Schedule 2 to the Bill commences the day after Royal Assent.

2.58 Item 28 of Schedule 2 to the Bill commences at the same time as Part 1 of this Schedule. However, the provisions do not commence at all if Part 1 of Schedule 6 to the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Act 2024 commences at or before that time.

2.59 Item 29 of Schedule 2 to the Bill commences immediately after the commencement of Part 1 of Schedule 6 to the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Act 2024. However, the provisions do not commence at all if that Part commences before the commencement of Part 1 of Schedule 2 to the Bill.

2.60 Items 28 and 29 of Schedule 2 to the Bill include contingent amendments in the event that the Bill commences before the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Act 2024 commences. The amendments made by Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Act 2024 will repeal the matter under paragraph 104(2)(c) dealing with 'the form and content of markings, warnings, or instructions to accompany consumer goods of that kind' and substitute it with:

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the form and content of markings to accompany consumer goods of that kind, and

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the form and content of warnings, instructions or other information about consumer goods of that kind.

[Schedule 2, Part 2]

2.61 Despite the repeal of section 108 (dealing with requirements to nominate and comply with a safety standard) by Schedule 2 to the Bill, that section continues to apply in relation to requests given by the regulator before the commencement of Part 1 of Schedule 2 to the Bill, as if that repeal had not happened. Section 108, as inserted by Schedule 2 to the Bill, applies in relation to safety standards made before, on or after commencement of Part 1 of Schedule 2 to the Bill.

[Schedule 2, item 27, section 308]

2.62 The amendments ensure a declared safety standard continues in force despite the repeal of the enabling provisions.

2.63 Specifically, a safety standard that was declared under section 105 and was in force immediately before the commencement of Part 1 of Schedule 2 to the Bill, continues in force (and may be dealt with) on and after the commencement of Part 1 of Schedule 2 to the Bill as if it were made for the purposes of section 104 (that is, the enabling provision for the Commonwealth Minister to make a safety standard) as amended by Schedule 2 to the Bill.

2.64 No saving provisions are prescribed for declared information standards under section 135, as none are in force.

[Schedule 2, item 27, section 307]

2.65 Sections 108A and 137B (dealing with the requirement to give information or documents), as inserted by Schedule 2 to the Bill, apply in relation to safety standards and information standards made before, on or after commencement of Part 1 of Schedule 2 to the Bill.

[Schedule 2, item 27, section 309]

2.66 Schedule 2 to the Bill is defined as the amending Schedule , to facilitate the application and savings provisions.

[Schedule 2, item 27, section 306]